Highcroft Investments issues positive property and ambivalent investor updates

Real estate investment trust company Highcroft Investments plc (LON: HCFT) posted its update for the six months through 30 June 2019, which revealed growth in rental income and mixed sentiments for investors.

The Company were pleased to book an 11.6% jump in gross rental income and 13.2% growth in net rental income, to £2,726,000 and £2,678,000 respectively.

Highcroft added that net investment into property increased from a £2,473,000 divestment to £11,897,000 invested on a year-on-year basis during the first half; while property valuation increased 14.3% during the first half, from £77.7 million at December 2018 to little over £88.8 million at the end of H1 2019.

Highcroft Investments comments

On these results, the Company’s statement disclosed the following,

I am pleased to report continued good trading results for the 6 months ended 30 June 2019. The board is happy with the progress of its ongoing strategy of developing a high-quality income-producing property portfolio, based on carefully sourced quality assets and tenants producing stable, secure income. This strategy has resulted in property income growth of 11.6% and an increase in adjusted earnings per share of 14.4% to 37.2p. Whilst our total property valuation increased by 14.3% after the acquisition of two new properties, our like-for-like property valuation fell slightly, by 0.35%, in the period (2018 1.6% uplift). This was due to the current market sentiment, particularly in our retail assets, but also the costs associated with our two acquisitions in the period. This led to a reduction in total earnings per share to 21.9p (2018 55.8p). Our net asset value per share fell by 1.0% in the period.”

On its financial news, it added,

“At 30 June 2019 the cash position was £610,000 (2018 £5,057,000) while our medium-term loans totalled £26,200,000 (2018 £19,400,000), resulting in a net gearing level of 41% (2018 23%). Our loan to value was 29.5% (2018 25.6%). The medium-term loans are at fixed rates with a weighted average of 3.5%.”

And looking forwards, it said,

“Whilst the ongoing property investment environment, in particular the retail sector, is likely to remain challenging for the remainder of the year, we believe that our asset selection criteria have helped to ensure that our current portfolio and tenant mix create a strong base from which to continue to develop our business and generate further shareholder value.”

Investor notes

Although the Company saw an expansion of its portfolio and increased rental income, the positive news for its shareholders was not quite as consistent.

While the Company reported a growth in its dividend, with property income distribution up from 18.75p to 21.00p, and a 14.4% growth in adjusted earnings per share, net assets per share were down 1% and total earnings per share dived 60.8% from 55.8p to 21.9p a share.

Following the update, the Company’s shares have grown 1.61% or 14.70p to 929.70p a share 22/07/19 10:05 BST.

Elsewhere in asset and investment management, there have been updates from; City of London Investment Group PLC (LON: CLIG), Miton Group PLC (LON: MGR), Walker Crips Group plc (LON: WCW), Liontrust Asset Management PLC (LON: LIO) and Mattioli Woods (LON:MTW).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.